Avatar Company Uses the Direct Method to Prepare Its Statement

question 151

Multiple Choice

Avatar Company uses the direct method to prepare its statement of cash flows. Please refer to the following information reported for the year 2014: In the operating activity section of the statement of cash flows, what amount would be shown for collections from customers?

• A)$244,000
• B)$236,000
• C)$240,000
• D)$258,000

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Definitions:

Variances

Differences between expected and actual performance in business metrics such as costs, revenues, and production levels.

Direct Labor-Hours

The total hours worked by employees directly involved in manufacturing goods or providing services.

Standard Costs

Pre-determined costs used as a benchmark for evaluating actual production costs within a business.

Raw Material

Basic, unprocessed materials used in the manufacturing process to produce finished goods.